As far as income tax refunds go, I know most financial planners will tell you that your goal should be to get nothing back, because otherwise the government is keeping your money. I agree with that sentiment for people who have credit card debt. It does seem silly not to not pay down more of that debt each month. But my feelings have changed (and changed again) over the years.
About seven or eight years ago, I thought the hubby and I were getting too much money back in our tax refund. I decided I would rather have a larger paycheck and then be able to put more money into savings. So I changed my withholdings (or whatever that is called) from 0 or 1 to 3, plus I even had extra taken out each month. I figured/hoped we would end up with well under 1k in a refund, and I was cool with that.
But the funny thing was that for many years, we never got anywhere close to that small of a refund. Some years we did well enough that we were able to do some home improvements (windows one year, tub surround another year, and a new AC and furnace after that). Our best year was my second year of being unemployed. This dropped us to a lower tax bracket, and because we had gotten new widows that same year, we ended up getting a really nice chunk of change back.
Oddly enough (to me) was a couple of years ago, when I had earned a decent (but less than the rate of poverty) amount of money freelancing. I had not paid any federal taxes on it, so I was penalized in my tax return, but we still ended up with a nice-sized federal return. Honestly, I thought we would owe or get only a few hundred dollars back. I was shocked!
Last year, we ended up with more money, though I had expected even more than that since I had done no freelancing. I figured this year we would end up with about the same.
I was wrong.
It turns out, we have now re-entered what I consider the silliest tax bracket. We went from the 15 percent tax bracket to the giant leap of the 25 percent bracket, because last year was my first full year of employment. We are barely at the low (income) end of this tax bracket. I am 99 percent sure we will never earn enough to make it to the next bracket of 28 percent. Nonetheless, a married couple can make about 3.5 times what the hubby and I are making and yet pay only 3 percent more in taxes than we do. Sigh. And to be clear, I am not saying that the more money you make, the more you should be taxed. I am more of a flat or fair tax kind of gal. This is kind of driving that point home.
I can't help but be disappointed. I was counting on a decent refund that would allow me to pay off the hub's truck (yes, I have clearly come back to wanting a large refund). Looks as if that won't be happening anytime soon.
I have tried to make myself feel better by reminding myself that we are finally making roughly what we made before I was laid off. But that just ends up making me sad, because 1) it took us six years to get back to that point, 2) I now work full time (I was working only 4 days per week before I was laid off), and 3) we somehow ended up with so much less of a refund than what we had gotten back then. Don't get it.
But the worrier in me knows as tenuous as my husband's job is, we may very well end up back in the 15 percent bracket next year. So I am just going to shut up. And maybe treat the family to a nice dinner with our return. You know, while we still can.
:-)
About seven or eight years ago, I thought the hubby and I were getting too much money back in our tax refund. I decided I would rather have a larger paycheck and then be able to put more money into savings. So I changed my withholdings (or whatever that is called) from 0 or 1 to 3, plus I even had extra taken out each month. I figured/hoped we would end up with well under 1k in a refund, and I was cool with that.
But the funny thing was that for many years, we never got anywhere close to that small of a refund. Some years we did well enough that we were able to do some home improvements (windows one year, tub surround another year, and a new AC and furnace after that). Our best year was my second year of being unemployed. This dropped us to a lower tax bracket, and because we had gotten new widows that same year, we ended up getting a really nice chunk of change back.
Oddly enough (to me) was a couple of years ago, when I had earned a decent (but less than the rate of poverty) amount of money freelancing. I had not paid any federal taxes on it, so I was penalized in my tax return, but we still ended up with a nice-sized federal return. Honestly, I thought we would owe or get only a few hundred dollars back. I was shocked!
Last year, we ended up with more money, though I had expected even more than that since I had done no freelancing. I figured this year we would end up with about the same.
I was wrong.
It turns out, we have now re-entered what I consider the silliest tax bracket. We went from the 15 percent tax bracket to the giant leap of the 25 percent bracket, because last year was my first full year of employment. We are barely at the low (income) end of this tax bracket. I am 99 percent sure we will never earn enough to make it to the next bracket of 28 percent. Nonetheless, a married couple can make about 3.5 times what the hubby and I are making and yet pay only 3 percent more in taxes than we do. Sigh. And to be clear, I am not saying that the more money you make, the more you should be taxed. I am more of a flat or fair tax kind of gal. This is kind of driving that point home.
I can't help but be disappointed. I was counting on a decent refund that would allow me to pay off the hub's truck (yes, I have clearly come back to wanting a large refund). Looks as if that won't be happening anytime soon.
I have tried to make myself feel better by reminding myself that we are finally making roughly what we made before I was laid off. But that just ends up making me sad, because 1) it took us six years to get back to that point, 2) I now work full time (I was working only 4 days per week before I was laid off), and 3) we somehow ended up with so much less of a refund than what we had gotten back then. Don't get it.
But the worrier in me knows as tenuous as my husband's job is, we may very well end up back in the 15 percent bracket next year. So I am just going to shut up. And maybe treat the family to a nice dinner with our return. You know, while we still can.
:-)
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